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Apple May Not Need This Supplier. Its Stock Crashes 23%

CUPERTINO (CNN Money) — Dialog Semiconductor is finding out what happens when you put most of your eggs (or apples, perhaps) in one basket.

Shares in the British-German tech company plunged 23% on Monday, after it acknowledged that Apple — by far its biggest customer — can now develop the power management chips Dialog produces.

Dialog shares had already slumped in April on fears that Apple could drop the company as a supplier, and Monday’s crash took the stock’s losses this year to more than 40%.

The company has previously tried to play down those concerns. Monday was the first time it has publicly acknowledged Apple could eventually replace its chips with in-house production.

“Dialog recognizes Apple has the resources and capability to internally design a [power management integrated circuit]and could potentially do so in the next few years,” the company said in a statement.

A lot is at stake. Apple accounted for74% of Dialog’s sales in 2016, according to the company’s annual report.

“This is a major disaster,” said Tim Wunderlich, analyst at Hauck & Aufhauser.

“I would expect Dialog to experience declining sales from 2019 onward, intensifying gross margin pressure, (and) brain drain as uncertainties make the company a far less appealing employer for top talent,” he added.